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- Parsvnath IPO can also be a rewarding long-term story
As we all engage ourselves in the hullaboo about the Parsvnath IPO, Here's what the industry experts have to say:
Though the Parsvnath Developers IPO is aggressively priced, it could bring listing gains and can also be a rewarding long-term story, say experts
The real estate developer plans to raise funds in the range of Rs 826 crore to Rs 991 to fund its eleven residential and commercial projects spread over the next four years. While money raised through the issue will fund a large part of the total requirement of Rs 1,428.5 crore, the rest will be financed by borrowings and customer advances. As the speedy pace of new construction continues in towns and cities across the country, real estate stocks are attracting a lot of investor interest.
The Parsvnath stock is valued at 41.6 times its pre issue FY06 earnings per share at the cap price and 34.6 times at the floor price. The price multiples of comparable players like Ansal Housing and Unitech stand at 19.3 times and 391 times their FY06 earnings.
According to analysts, the stocks seems to be aggressively priced, however they advise investors to subscribe to the issue as Parsvnath Developers is likely to bring substantial returns in the long term.
Though going by the historical earnings, the issue looks to be dearly priced; land bank value and future earnings visibility do make Parsvnath a good investment opportunity.
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- Will real estate IPOs get good response from investors?
Real estate IPOs have always been the sceptical issue which people would think and rethink before investing. But maybe the good response from Parsvnath IPO will bring changes in the business plans...... :)
The huge over-subscription of the Parsvnath issue has set the sparks flying for real estate stock investments.
Industry analyst believe that real estate IPOs will definitely see significant response from investors and that Parsvnath Developers definitely has paved the way for that. This particular offering has definitely paved the way for other IPOs from the real estate sector. DLF will be coming in but even before DLF, we are bringing in Sobha Developers to the market and other real estate IPOs will definitely see significant response from investors and Parsvnath definitely has paved the way for that.
Experts at JM Morgan Stanley believes that markets are supportive, people are supportive, corporates are showing the performance and hence, this is the right time to raise capital.
The other issue is that this is the first real estate IPO in the market and the first one sets up the tone and the pace. The matrix for valuation will be decided over the period of time but this sets the tone.